78 coins in 6 hours? If he had the technical expertise to get that going on a bunch of systems, seems like he wouldn't have made such a silly mistake. Also, how can you not have time to back up wallet.dat.

1.Insert thumb drive.2.Copy wallet.dat on to said thumbdrive3.Eject said thumb drive

Maybe 2 minutes at maximum if you are having a problem finding wallet.dat.

Immediately stop using the hard drive. If you must have a working system, make a disk image of the drive and use the image (use software like ghost 11); pull the drive and stop using it. Every disk write is a chance that the area of the drive that held the bitcoin private keys will be overwritten.

The private keys of bitcoin addresses can be recovered off the hard drive after the files are deleted. However, Windows Vista/7 defrags once a week and will quickly overwrite unallocated areas if you don't yourself.

I have a related question. If his bitcoins are lost forever, does that mean we are going to end up using smaller and smaller fractions of bitcoins in the future as this continues to happen (and it will I am sure)? What is the theoretical smallest fraction bitcoins could handle? Is there anyway to tell how many coins are offline and/or lost compared to how many are floating around in the PtP network?

If his bitcoins are lost forever, does that mean we are going to end up using smaller and smaller fractions of bitcoins in the future as this continues to happen (and it will I am sure)?

That is correct, for a different reason than what you might expect. Deflation from 'losing' Bitcoins is negligible; what really causes deflation over time is increased demand for Bitcoins and not many new Bitcoins being mined.